It has been a little over two months since the government launched “SME Co-Financing Scheme 2020” (SCFS) to provide small and medium-sized enterprises (SMEs) with loans and preferential rates to maintain and develop their businesses and production lines.
Financial institutions participating in the project have reported rising demand in loan applications.
The Ministry of Economy and Finance launched the Small and Medium Enterprise Bank of Cambodia (SME Bank) in April with initial capital of $100 million in tandem with the SCFS, a joint venture between SME Bank and partner financial institutions.
On April 23, Prasac Microfinance Institution Ltd (Prasac) executive vice-president Say Sony said the SCFS aims to provide low-interest loans to SMEs and build up priority sectors – manufacturing and handicrafts, curb imports while satisfying domestic demand, and create employment opportunities.
The ministry has said SMEs can borrow $200,000 for working capital and $300,000 for investment capital from the bank, at a seven per cent annual interest rate and a payback period of not more than seven years – revised from four years initially.
“The collateral depends on the criteria of the financial institution. All SMEs can apply for a loan but they must be registered with the ministry.
“Small enterprises must earn at least 250 million riel [$61,500] per year or employ between 10 and 50 people. Income for medium-sized enterprises must be at least 700 million riel or it must employ between 51 and 100 people,” said the ministry.
Early last month, Federation of Associations for Small and Medium Enterprise of Cambodia president Te Taingpor told a press conference at the Council of Ministers that SME Bank had expanded its capital from $100 million to nearly $150 million.
SME Bank deputy CEO Tan Linna told The Post on Tuesday that it is working closely with member banks and microfinance institutions, as well as other private-sector community members to promote the SCFS.
“We’ve seen that many SMEs are in need of financing to carry on their operations or to expand, or to start up,” she said, adding that, as of Tuesday, SME bank had received 19 applications from 10 member financial institutions and had approved $3.11 million in loans.
She said she also received complaints from customers regarding loan requirements, but noted that they would be resolved soon after obtaining permission from the ministry.
Soeng Phorn, senior vice-president and credit division head at Acleda Bank Plc, a partner bank which has been working on the SCFS, told The Post that the co-financing project is receiving a lot of interest from small and medium business owners.
Acleda Bank has received 11 applications for loans under the SCFS, and many inquiries regarding the project, he said.
“The SME-backing co-financing project has provided clients with many benefits – not only low interest rates but also no loan fees,” said Phorn.
He said the applications were in areas such as agriculture, tourism, artisanal foods and fibreglass manufacturing. He noted that some of the applications were for the maximum allotted $300,000.
The applications for “two of the 11 projects are currently under active review to determine their eligibility for a loan” under the SCFS, said Phorn.
Prasac’s Sony told The Post that although his institution had only seen a few applications, he is confident that the government initiative will help develop and advance the Kingdom’s SMEs.
He added that Prasac is keen to support SMEs with investment capital of up to 1.26 billion riel or with working capital of up to 840 million riel for their businesses with a special interest rate of 0.58 per cent per month and loan term of up to seven years.
“Amid the Covid-19 pandemic, Prasac continues to provide loans to clients as usual and special offers to SMEs. On behalf of the management and staff at Prasac, I would like to thank all of the borrowers who have supported and used Prasac’s financial services,” said Sony.